India Food & Drink Report | Q3 2018bmiresearch.com10
DrinkBMI View:India's underdeveloped beer market holds immense potential for growth and investment as changing cultural attitudes,low base effects and a young, increasingly affluent consumer base will drive volume and value growth over the coming years. Whilespirits, particularly whiskey, will remain the alcoholic drink of choice for many Indians, the beer sector is primed to record thestrongest growth over our forecast period to 2022. In the non-alcoholic drinks segment, we highlight fruit juices and mineral watersas the categories that outperform.Latest Updates•We forecast alcohol consumption (volume terms) in India to rise at a compound annual growth rate (CAGR) of 4.4% over ourforecast period to 2022, with beer the outperforming category with a 6.9% CAGR.•Traditional conservative beliefs regarding alcohol consumption do not hold the same level of influence among young urbandwellers in India. Drinking in bars is fast becoming part of daily social life across major cities such as Mumbai, Delhi and Bangalore.•We forecast that non-alcoholic drinks sales (in local currency terms) will see growth of 9.9% in 2018. On a five-year CAGR basis to2022, non-alcoholic drinks spending is set to grow by 9.1%.Structural TrendsAlcoholic DrinksThe alcoholic beverages industry in India is dominated by spirits, followed by beer, with the wine market a distant and undevelopedthird. Despite large gains across the Indian food and beverage market, the alcoholic drinks market is not forecast to deliver thegrowth that would be expected in a fairly undeveloped market with a growing, young and economically-active consumer base.Total Alcohol ConsumptionTotal alcohol consumption, litres mn (2015-2022)e/f = BMI estimate/forecast. Source: BMI, WHOIndia Food & Drink Report | Q3 2018bmiresearch.com11
We hold a favourable outlook for the spirits segment, which has traditionally been more popular than beer among Indian consumersfor several reasons. First, alcoholic drinks are taxed by volume in India, which puts spirits at a competitive advantage over beer.Second, India has more of a spirits culture, with whisky being the most consumed alcoholic drink by a large margin. According toour estimates, whisky consumption currently stands at 3.9 litres per capita, compared to 0.5 litres for rum and 0.3 litres for gin.Therefore, we expect spirits producers to ramp up investment over the next five years. BothDiageoandPernod Ricardhavecategorised India as a strategic growth market, although their respective strategies have so far differed. Diageo first focused onpremium spirits in the market, in order to target the wealthiest consumers, and then acquired a majority stake in domestic producerUnited Spirits. On the other hand, Pernod Ricard entered the market organically with a strong focus on domestic whiskies andother affordable liquors.
- Summer '18
- Sagar Arora
- ........., Alcoholic beverage, Food processing